CHM Blog

Over twice as many NFP jobs than were expected, +336K with estimates at 160K. Private jobs thought to be +150K increases 263K. The increase above estimates is as wide as we have seen in over a year, the average job gains over the last 12 months 267K. The change in total nonfarm payroll employment for July was revised up by 79,000, from +157,000 to +236,000, and the change for August was revised up by 40,000, from +187,000 to +227,000. With these revisions, employment in July and August combined is 119,000 higher than previously reported. The major labor market indicators from the survey of households showed little or no change over the month. The unemployment rate held at 3.8 percent in September, and the number of unemployed persons was essentially unchanged at 6.4 million. Both the labor force participation rate, at 62.8 percent, and the employment-population ratio, at 60.4 percent, were unchanged over the month.

The initial reaction to the data was, as usual, volatile; the 10 year note increased 11 bps then dropped back to +4 bps before exploding back to 4.85% +14 bps. The government figures, along with other data like the recent pickup in job openings, add to the case for central bank officials to raise rates — already at a 22-year high — by another quarter percentage point this year. 4.85% is a new high.

At 9:30 am the DJIA opened -86, NASDAQ -56, S&P -17. 10 year at 9:30 am 4.83% +12 bps. FNMA 6.5 30 year coupon at 9:30 am -52 bps, 65 bps from 9:30 am yesterday. The 6.0 coupon -61 bps. -49 bps from 9:30 am yesterday.

At 3 pm today August consumer credit data will be released, overall credit expected at $11.5B from $10.4B; what we are interested in in the data is the revolving credit data, credit cards.

Will the 10 year note climb to 5.0% as an increasing number of economists and investors are beginning to speculate? Next Wednesday and Thursday inflation reports, PPI and CPI will be reported, the results will determine whether the Fed goes another 25 bps next month. Let’s also not overlook the debt mess that is gaining momentum with another debt ceiling decision in less than 40 days from now and no Republican leadership.

PRICES @ 10:00 AM

10 year note: 4.84% +13 bp

5 year note: 4.81% +12 bp

2 year note: 5.08% +6 bp

30 year bond: 5.00% +11 bp

30 year FNMA 6.5: @9:30 am 99.38 -52 bp (-65 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 97.42 -61 bp (-49 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 95.59 -74 bp (-77 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1969 -$0.0035

Dollar/Yen: 149.37 +0.86 yen

Dollar/Euro: $1.0509 -$0.0042

Dollar Index: 106.78 +0.45

Gold: $1833.50 +$1.70

Bitcoin: 27,564 +95

Crude Oil: $82.26 -$0.06

DJIA: 32,924 -195

NASDAQ: 13.109 -111

S&P 500: 4226 -32

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.